HB 189 -- Technology-Based Business Development

Sponsor:  Flook

This bill establishes the Seed Capital Technology Business
Finance Program Act and the Proof of Concept Technology Business
Finance Program Act and authorizes tax credits for investments in
technology-based early state Missouri companies.

SEED CAPITAL TECHNOLOGY BUSINESS FINANCE PROGRAM ACT

The Seed Capital Technology Business Finance Program Act creates,
within the Missouri Technology Investment Fund, the Seed Capital
Technology Business Finance Program Account.  The account will
consist of appropriations, gifts, contributions, grants,
bequests, payments on loans made from the account dividends paid
on shares of stock purchased with moneys from the account,
royalty proceeds, and any other form of return on authorized
investments.

The Missouri Technology Corporation may use moneys in the account
to make investments in an advanced technology company that is at
the early development stage of commercializing advanced
technology.  Investments must be loans convertible to equity,
equity, or loans with stock subscriptions or similar warrants
that are beneficially owned by the corporation.

An eligible company must have 50% or more of its employees and
assets in Missouri, be at the seed or start-up stage, and have
innovative products and services.  Eligible advanced technology
industries include animal health, biotechnology, information
technology, communications technology, aerospace, electronics,
robotics, medical devices and instruments, telecommunications,
plant sciences, and energy.  Ineligible industries include
banking and lending, development, management and investment
companies, finance, insurance, mining, oil and gas exploration,
real estate, wholesale, and retail.

The corporation is required to hire professional equity fund
managers for professional review of applications, performance of
due diligence, and other advisory services before any investments
can be made.  Investments can only be made upon the
recommendation of the professional equity fund managers.  The
bill specifies the requirements which must be met before the
corporation can make investments in eligible advanced technology
companies.

Investments made by the corporation cannot be greater than the
lesser of $750,000 or the amount necessary to gain 49% ownership
interest in any advanced technology company at the time of
investment.

PROOF OF CONCEPT TECHNOLOGY BUSINESS FINANCE PROGRAM ACT

The Proof of Concept Technology Business Finance Program Act is
established which creates, within the Missouri Technology
Investment Fund, the Proof of Concept Technology Business Finance
Program Account consisting of appropriations, gifts, grants,
contributions, bequests, and payments on loans made from the
account.

The Missouri Technology Corporation may use moneys in the fund to
make a one-time loan to a company that is at the early
development stage of commercializing advanced technology.  The
loan amount to any single company cannot exceed $75,000.  Loans
must be repaid within five years in an amount equal to twice the
amount loaned.  Early repayment will result in prorating the
repayment amount.

Eligible companies must be technology-based; sufficiently
innovative to provide a competitive advantage in the marketplace;
have the potential for significant, high-performance growth; be
at the early development stage of commercializing advanced
technology; have 50% or more of its employees and assets in
Missouri; and have average wage levels of at least 35% higher
than the average county wage level as determined by the
Department of Economic Development for the most recently
completed calendar year.

At the time a loan is made, the eligible company must be a small
business concern that meets the requirements of the United States
Small Business Administration's qualification size standards for
its business loan program.

Eligible advanced technology industries include animal health,
biotechnology, information technology, communications technology,
aerospace, electronics, robotics, medical devices and
instruments, telecommunications, plant sciences, and energy.
Ineligible industries include banking and lending, development,
management and investment companies, finance, insurance, mining,
oil and gas exploration, real estate, wholesale, and retail.

The bill specifies the requirements which must be met before the
corporation can make a proof of concept loan.

TAX CREDITS FOR TECHNOLOGY-BASED EARLY STAGE MISSOURI COMPANIES

The department is allowed to authorize up to $5 million in tax
credits per year to encourage equity investment in
technology-based early stage Missouri companies, commonly known
as angel investments.  Investors who contribute the first
$500,000 in equity investment to a qualified Missouri business
may be issued a tax credit equal to 30% of the investment or 40%
if the qualified business is in a rural area or distressed
community.  An investor can receive a credit of up to $50,000 for
an investment in a single qualified business and up to $100,000
for investments in more than one qualified business per year.
Credits can be carried forward for up to three years or
transferred.

Missouri House of Representatives
95th General Assembly, 1st Regular Session
Last Updated November 17, 2009 at 9:24 am